THE BREAKFAST BRIEFING

Earnings season hasn’t really started yet. The jobs report was, well, not great, but good enough. The Dow and S&P 500 are still within shouting distance of their all-time highs. So why all the agita?

Since hitting an intraday high of 1897 on Friday, the S&P 500 is off about 2.7%. The index fell as low as 1841.46 on Monday, before closing at 1845. The 1840 level, in fact, is one that’s been noted by several market observers as a key technical marker. For now, it’s a support level – since it held. That’s a good sign for the bulls, as far as it goes. But Monday’s slide, and that 1845 close, means the downward pressure is still there although the S&P futures contract suggests a flat opening Tuesday.

Meanwhile, the Nasdaq Composite continues to be the hardest hit of the three major indexes, and is exerting pressure on the Dow and S&P 500. The Nasdaq is down 6.4% from its 14-year high of 4359, hit March 5, and is down 4.6% the past three sessions (the worst three-day slide since November 2011). The Russell 2000 is also taking on water, down 6% since hitting its all-time high on March 4.

The Nasdaq and Russell were up 40% and 39%, respectively, in 2013. If those two surging indexes, filled with small-caps, momentum stocks, and volatile tech names, are the leading edge of a selloff, it’s a bad sign for the market. “Overall, this [small cap] break to new lows which just occurred in the last couple days is a warning sign, and indeed problematic for the larger market, and despite nearing initial support, is something that’s causing a meaningful pullback in momentum,” Mark Newton, chief technical analyst at Greywolf Execution Partners, wrote in a note to clients.

Why is the market in such a cranky mood? Friday’s jobs report more or less got the jobs market back to its pre-winter growth trend, and David Levy of the Jerome Levy Forecasting Center anticipates that analysts will underestimate the bounce back from the winter, leading to a series of “upside surprises” in the data. That should be good. But at the same time, the market is grappling with the reality that the Fed, even if it’s moving slowly, is removing its monetary support.

“What if the current stock market correction turns into something more protracted and investors just don’t buy the growth rebound without the Fed remaining at the helm?” wrote Andrew Wilkinson, the chief market analyst at Interactive Brokers. If the market doesn’t like that scenario, it’s got a problem, he noted: the problem being that everyone “is on one side of the boat staring over the edge at the prospect of imminent Fed tightening.”

That seems to about sum it up, really.

Morning MoneyBeat Daily Factoid: On this day in 563 B.C., the queen of Sakya, a realm situated around the present-day border of Nepal and India, gave birth to a son. His father, the king, took great pains to raise him in a style that would lead to his becoming king himself one day. But curiosity of the wider world seized the prince. At age 29, he set off to see the world. At 35, while sitting under a pipal tree, he achieved enlightenment. His name changed, from Siddhartha to Gautama Buddha, and he began preaching the tenets of what would become one of the world’s major religions, Buddhism.

STOCKS TO WATCH

Alcoa is projected to report first-quarter earnings of 5 cents a share, according to a consensus survey by FactSet. The stock’s rating was raised to hold from sell and its target price also hiked to $10 from $7.50 at Deutsche Bank on Monday.

WD-40 is forecast to post fiscal second-quarter earnings of 68 cents a share. “We think WDFC could post strong multi-purpose maintenance product sales in the Philippines due to typhoon clean-up efforts; Philippines is one of the largest markets in WDFC’s Asia Pacific distributor segment, which is over 6% of total sales,” said Linda Bolton Weiser at B. Riley & Co.

SAIC is expected to post fourth-quarter earnings of 67 cents a share. Analyst Jason Kupferberg at Jefferies noted that he is cautious about SAIC’s results due to signs that overall government spending and award activity has worsened since the previous quarter.

MUST READS (LINKS)

Kerry, Military Clash on Syria: “Frustrated by the stalemate in Syria, Secretary of State John Kerry has been pushing for the U.S. military to be more aggressive in supporting the country’s rebel forces. Opposition has come from the institution that would spearhead any such effort: the Pentagon.”

Mideast Peace Hopes Scaled Back: “With hopes for a comprehensive peace agreement fading, some influential former officials say it is time to consider a ‘Plan B’ with the less ambitious goal of living peacefully and leaving the tough choices for another day.”

Ukraine Could Be Plunged into Civil War, Warns Russia: “Russia’s foreign ministry warned Tuesday that any use of force by Ukrainian authorities to dislodge pro-Kremlin separatists who have seized control of government buildings in three cities in eastern Ukraine could plunge the country into civil war.”

Jet Search Focuses on Pings: “After a month scouring vast stretches of land and ocean for Malaysia Airlines Flight 370, search crews are focusing on regaining contact with underwater signals consistent with the missing jet’s black box flight recorders that were first detected Saturday.”

Citi Is Bracing to Miss a Profit Target: “Citigroup is warning investors it may miss a key profitability target after the Federal Reserve rejected the bank’s capital plan last month, people familiar with the matter say.”

Banks Get Volcker Rule Extension: “The Federal Reserve said Monday it will give banks two years of extra time to conform certain debt holdings with the Volcker rule, but stopped short of granting an exception the industry had been seeking.”

Nursing-Home Firm, Barclays Settle Suit: “Barclays agreed to settle a closely watched case over allegations it wrongfully sold interest-rate products to a nursing-home provider, heading off a potentially embarrassing episode for the British bank.”

Nokia Gets Chinese Approval: “Nokia said Tuesday that it has received regulatory approval from China for the €5.4 billion ($7.4 billion) sale of its handset business to Microsoft.”